Choosing a PayPal account structure is not straightforward fare for most people, so in this post, I’ll attempt to demystify the whole process of signing up with PayPal and choosing an account type.

You start out with a Personal account, but you can then upgrade to Premier or Business accounts.

PayPal offers two different account types; PayPal for your personal use (Personal and Premier), and PayPal for your business (Business). It’s free to sign up and each account type offers different features and capabilities. To decide which one is right for you, read on.

If you decide to go ahead with the upgrade, you’ll get this confirmation screen:

There is no good reason to have a Premier account if you are going to use PayPal for business. The fees are similar to or same as Business but some of the features not available.

You don’t need to have a properly registered “business” to have a Business account. It can be a DBA (“doing business as”).

You can have several Business accounts (just remember that each one should be linked to a different bank account/credit card).

There are no monthly fees for any of the accounts.

Additional services cost $35/month for all of them. You need to get approved to get them. You may get approved for one but not the other.

Additional services include:
– Website Payment Pro (allows you to link PayPal to a shopping cart and charge credit cards without taking your customer to PayPal).
– Recurring Payments
– Virtual terminal (may be handy if you run live events or work with offline clients).

If you have various ventures and want to have a separate PayPal account for each one, now you can set up a “child” account that is linked to your main one. The benefit is that the money will be swiped from it daily and put into your parent one automatically and with no fees involved. Also, you don’t need to link a child account to a bank account. To set up a child account, create a new PayPal account then call PayPal on the phone and ask them to link the new account to your main PayPal account.

The concise comparison:

Personal: Recommended for individuals who shop and pay online.

Premier: Recommended for casual sellers or non-businesses who wish to get paid online, and who also make online purchases.

Business: Recommended for merchants who operate under a company/group name. It offers additional features such as allowing up to 200 employees limited access to your account and customer service email alias for customer issues to be routed for faster follow-ups.

Since my business is based in Malta, I’ll be describing the PayPal fees for this situation. Other European countries should have similar fees, but do check the PayPal website for your country for more accurate details.

Click this link to check the standard rates for receiving and sending money with PayPal.

The standard rate for receiving payments for goods and services is 3.4% + 0.35 EUR.

If you receive more than 2,500.00 EUR per month, you’re eligible to apply for PayPal’s Merchant Rate – which lowers your fees as your sales volume increases. Your fees can be as low as 1.9% + 0.35 EUR, based on your previous month’s sales volume. For receiving money for product or service sales at the merchant rate, these are the prices:

Monthly Sales

Price Per Transaction

€0.00 EUR - €2,500.00 EUR

3.4% + €0.35 EUR

€2,500.01 EUR - €10,000.00 EUR

2.9% + €0.35 EUR

€10,000.01 EUR - €50,000.00 EUR

2.7% + €0.35 EUR

€50,000.01 EUR - €100,000.00 EUR

2.4% + €0.35 EUR

> €100,000.00 EUR

1.9% + €0.35 EUR

Here’s the e-mail you get after you apply (manually) for the Merchant Rate:

Note that the rates in the table above are for domestic transactions. If you have customers offshore then you will incur what is known as a cross-border payment charge. Click here to view the higher cross-border transaction fees. You will still benefit from lower rate bands with cross-border payments once you apply successfully for the Merchant Rate.

The accounts we’ve mentioned till now don’t have any monthly fee, but PayPal also offers the PayPal Pro solution, which costs $30 per month.

The Pro solution is for heavy PayPal users, and allows you to benefit from lower rates among other services. Click this link for more information about Pro. Go for Pro if you need full payment gateway functionality, as this system will allow you to create a fully customized checkout process that will enable customers to complete the purchase from your site rather than being transferred to PayPal as is the standard procedure.

Here’s Pro in a nutshell:

$30.00 USD monthly

No set-up fees

No cancellation fees

Transaction fees 1.9% to 3.4% + 0.35 EUR

Managing Multiple Currencies

You can choose what currencies to accept and how you would like to accept them. When a buyer sends a payment in a currency you hold, the money will automatically appear in your account in that currency. When a buyer sends a payment in a currency you don’t hold, you can:

Open a new currency balance to accept the payment.

Convert the payment to a currency you do accept.

Block the payment.

You can choose a primary currency as the one you use most often for sending and requesting payments. It’s also the currency that is used for your withdrawal limits.

If you convert a payment into your primary currency, PayPal offers conversion rates that are competitive with those of other consumer services. You can always preview conversion rates on currencies you don’t hold before accepting payments.

An Example

So how do PayPal transactions look? Let’s say I have a client from the US and charged him $600 for some web services I rendered. When he pays me via PayPal here’s what I see in my account:

Now what’s important here is to know exactly what that $29.70 fee stands for. Since this is a cross-border payment (US to Malta), it can be broken down as follows:

Base fee (3.40% + $0.30 USD) = $20.70 USD.

Cross-border fee consisting of a fixed (0.50% and 1.00% depending on between which countries the transfer is made) = $3.00 USD and $6.00 USD respectively.

As an average, be prepared to pay around 5% in transaction fees for every offshore payment you receive via PayPal.

If I remember correctly, with a Personal account you can accept or deny payments. Before you accept the payment, you can see the estimated transaction fee on the ‘Transaction Details’ page. If you deny the payment, the fee is not charged. With a Premier or Business account, there is no such option to accept or deny payments.

Refunds

When you issue a refund, you don’t lose any money and the purchaser gets all his money back. Click here to see the full refund policy together with a worked out example of how refunds work.

Withdrawing funds from PayPal

Not all countries offer the same facilities for withdrawing funds from Paypal. For example, in my home country Malta, we can only withdraw money to a credit, debit, or prepaid card as well as a US bank account, but no local accounts. In many countries, you are able to withdraw to a local account. I certainly miss that feature as right now I have to accept all USD being converted automatically to my card’s currency which is always EUR by default since I’m in Malta.

Paypal provides a handy checker where you can select your country and see which withdrawal options are available for that country.

Further notes

Please be aware that there are two different types of payments that can be sent using PayPal – Purchase Payments and Personal Payments. With a Personal payment type, the sender of the payment can choose who pays the fee which is incurred. However, it is not free to send the payment. Either the sender or the receiver must pay. It is possible to receive personal payments to a Personal or Premier PayPal account.

If you are planning on receiving payments for a business you are running, you may need to upgrade your account type, as a Personal account is not suitable for receiving large amounts of payments. However, if you are only receiving a small number of payments, you are free to do so.

It is possible to have two PayPal accounts, however only one can be for personal use, and must be either Personal or Premier type. It’s not possible to have a Personal and Premier account at the same time.

You can downgrade from a Business account to a Premier account, but not back down to a Personal account.

PayPal users can have one Personal account and one Premier or Business account. Each account needs to have a unique email address, bank account and credit card.

Hopefully, that helps to make your choice easier. If you have any questions, fire them off in the comments section.

As online workers many of the transactions we make are conducted in US dollars. Since we then have to convert those dollars to our home currency (in my case Euro), exchange rates play a very important role and should be monitored carefully.

I recently did some research about exchange rates offered by Maltese banks, when making a USD transfer, which automatically gets converted to Euro upon arrival in your bank account.

Interestingly enough, almost all banks offered a rate 0.745 Euro for every 1 USD. Only HSBC offered a worse rate, giving out 0.741 Euro for every 1 USD. I’ve also included the PayPal conversion rate for reference.

Bank buys USD

HSBC

1.3504

BOV

1.3426

APS

1.3402

Banif

1.3409

Lombard

1.3402

PayPal

1.3636

This might not make much difference on small amounts, but when we deal with a few thousand dollars the difference quickly adds up. I monitored the rates over a few weeks and HSBC consistently offered worse rates. I’m not entirely sure why there is this discrepancy, and will try to investigate further.

1000 USD

5000 USD

HSBC

740

3702.60

BOV

744

3724.12

APS

746

3730.79

Banif

745

3728.84

Lombard

746

3730.79

PayPal

733

3666.67

Here are some handy links to the exchange rates offered by the main banks in Malta:

A great service for receiving and making payments is Transferwise, it’s cheaper than using PayPal or bank transfers. It’s still quite new but I’m sure we’ll be hearing more about it in the coming months.

Every year or so, I like to take a few days off and make a retreat. I don’t go on holiday to some fabulous destination (although I do that too at other times).

When I go for a retreat, the one thing I look for is silence.

I like to find a retreat house in the countryside or wilderness, and spend 2-4 days there without talking to anyone. I suspect many of us don’t realize exactly how noisy our lives are. The experience of spending a few days in complete silence is can at times be overwhelming, but highly beneficial.

Whenever I do such a retreat, I always come back to ‘real life’ way more focused, and with a renewed and positive attitude. Last week, I did this year’s retreat and as usual, it was a great experience. In fact, I’d like to make it a more regular thing. I’d also like to incorporate more elements of reflection and meditation in my daily life.

If you’re like me, you sometimes enjoy playing games alone, but still fancy the fun aspect of playing games with friends and family. I am not a big gamer anymore, although I do immerse myself in some retro classics every now and then. Mostly I like to play games with my girlfriend. Unfortunately, there aren’t many games that feature the so-called local co-op functionality, which allows you to have 2 players on the same game.

Here are my favorites, plus some resources where you can find out more about such 2 player+ games.

Rayman Origins

Fantastic game, we had a real blast going through this one. It has a perfect difficulty level, not too difficult most of the time, but frustratingly so at times, which is really great. The graphics are absolutely charming, as is the music. Definitely the best local co-op game for PC I’ve played till now.

Mari0

Super Mario doesn’t need any introductions, it’s possibly the most famous classic game there is. What’s different in this one is, of course, the ability to play with two characters (Mario and Luigi) at the same time. Best of all, it’s free!

My home currency is the Euro, so my bank account uses Euro by default. Online I collect payments in USD since that’s the de facto currency on the web. That means that when it’s time to get the gold home I am subject to conversion rates when changing from USD to Euro. This is precisely where many people lose a good chunk of money, so you have to be careful.

Since your bank account is in Euro and your PayPal account is in USD, a conversion needs to take place. Now it’s a well-known fact that PayPal currency conversion rates aren’t the best, they incorporate quite a healthy profit for themselves here. So it might actually be better for you to let your bank handle the conversion at their exchange rates.

All you need to do is check out your bank’s exchange rates, make your calculations on how much Euro they would give you for a given amount of USD, then compare it to what PayPal would give you via their currency converter.

Beware also that some banks charge an extra fee for currency conversions. My bank charges around 1 Euro each time there is a conversion.

If you establish that it would indeed be beneficial for the bank to handle the conversion, you can change your PayPal account from being Euro based to USD based via this link.

Setting the currency to use when withdrawing money

On a related note, you can check the net amount you will receive from a PayPal money transfer via this PayPal fee calculator. Sadly, it appears that the calculator’s formulae are a bit out of date as the net amounts didn’t exactly correspond when I tested it on my account.

Note that if you have a Europe-based USD bank account, you will not be able to send USD directly from PayPal to that USD bank account. There will always need to be a conversion happening on the bank’s side, and the money will then go to your Euro account.